‘Low inflation could be linked to less spending power in some states’

‘Low inflation could be linked to less spending power in some states’

Mangaluru, May 20: India’s annual retail inflation, measured by the Consumer Price Index (CPI), has a huge variation from state to state, ranging from (-) 0.72 per cent to 5.21 per cent, against the national figure of 2.92 per cent , an Assocham analysis has said.
“While lower level of consumer spending power and demand, which is a function of the net state domestic product, could be one of the reasons for low inflation in some states, it does not seem to be conversely true when it comes to states with higher per capita income. Several of the states, with more than national per capita income, have witnessed equally low scale of retail inflation”, our analysis has pointed out, said Assocham deputy secretary general Saurabh Sanyal.
For instance, the retail inflation in Bihar for April, as per the official data, was 0.58 per cent and the state also figures among the lowest of the per capita income a little shy of $600 against the national average of $1600.
But, states like Maharashtra, Gujarat, Haryana and Andhra Pradesh which are among the best performing states in terms of per capita income, too have lower than national level of inflation as well. “This means, higher spending in these states have not necessarily translated into higher inflation”, the chamber research note stated.
Paradoxically, states with hilly and difficult transport terrain, too witnessed lower or even negative inflation, as compared to widely networked states.
For instance , a hilly state of Himachal where transport infrastructure cannot be as good as that of states in the plain, has recorded the negative level of CPI of -72 per cent in April, against Karnataka which is among the developed states in terms of critical infrastructure, but with the highest retail inflation of 5.21 per cent.